<PAGE>
================================================================================


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ------------------

                                   FORM 10-Q/A

                                 Amendment No.1

[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                  FOR THE QUARTERLY PERIOD ENDED JULY 31, 1999

                                       OR

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

                        COMMISSION FILE NUMBER: 001-11807
                           ---------------------------

                                UNIFY CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                        94-2710559
--------------------------------                     ---------------------------
(STATE OR OTHER JURISDICTION OF                  (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION)                                NUMBER)

                           2101 ARENA BLVD, SUITE 100
                          SACRAMENTO, CALIFORNIA 95834
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                            TELEPHONE: (916) 928-6400
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                    YES X      NO
                                       --
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

   17,707,228 shares of Common Stock, $0.0005 par value, as of August 31, 1999


================================================================================


<PAGE>

                                UNIFY CORPORATION
                                   FORM 10-Q/A

                                      INDEX

<TABLE>
<CAPTION>

                                                                                            PAGE
                                                                                           NUMBER
                                                                                           ------
<S>              <C>                                                                        <C>
PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

                  Condensed Consolidated Balance Sheets as of
                    July 31, 1999 (Restated) and April 30, 1999...............................3

                  Condensed Consolidated Statements of Operations for
                    the three months ended July 31, 1999 (Restated) and 1998..................4

                  Condensed Consolidated Statements of Cash Flows
                    for the three months ended July 31, 1999 (Restated)and 1998...............5

                  Notes to Condensed Consolidated Financial Statements........................6

Item 2.           Management's Discussion and Analysis of
                    Financial Condition and Results of Operations.............................9


PART II.          OTHER INFORMATION

Item 5.           Other Information..........................................................15

Item 6.           Exhibits and Reports on Form 8-K...........................................15


SIGNATURE  ..................................................................................16
</TABLE>



                                       2


<PAGE>








ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                UNIFY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                                                           July 31,       April 30,
                                                                            1999             1999
                                                                        ----------       ----------
                                                                       (UNAUDITED
                                                                       AS RESTATED
ASSETS                                                                 -SEE NOTE 1)             (1)
<S>                                                                    <C>                <C>
Current assets:
   Cash and cash equivalents                                            $  8,993           $  5,315
   Investments                                                             3,663              6,072
   Accounts receivable, net                                                6,585              9,156
   Prepaid expenses and other current assets                                 662                732
                                                                        --------           --------
      Total current assets                                                19,903             21,275

Property and equipment, net                                                1,290              1,417
Other assets                                                                 206                242
                                                                        --------           --------
      Total assets                                                      $ 21,399           $ 22,934
                                                                        ========           ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                     $  1,059           $  1,138
   Notes payable to minority interest stockholders                           517                608
   Accrued compensation and related expenses                               1,346              1,650
   Other accrued liabilities                                               2,077              2,621
   Deferred revenue                                                        4,075              3,326
                                                                        --------           --------
      Total current liabilities                                            9,074              9,343

Minority interest                                                             --                265

Stockholders' equity:
   Common stock                                                                9                  9
   Additional paid-in capital                                             54,439             54,123
   Note receivable from stockholder                                         (101)              (125)
   Accumulated other comprehensive loss                                     (683)              (653)
   Accumulated deficit                                                   (41,339)           (40,028)
                                                                        --------           ---------
      Total stockholders' equity                                          12,325             13,326
                                                                        --------           ---------
      Total liabilities and stockholders' equity                        $ 21,399           $ 22,934
                                                                        ========           =========
</TABLE>


(1)   Derived from the audited consolidated financial statements for the year
      ended April 30, 1999.


     See accompanying notes to condensed consolidated financial statements.


                                       3


<PAGE>


<TABLE>
<CAPTION>

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)



                                                                     THREE MONTHS ENDED JULY 31,
                                                                          1999             1998
                                                                      ----------       ----------
                                                                      (AS RESTATED
                                                                      -SEE NOTE 1)
<S>                                                                  <C>              <C>
Revenues:
   Software licenses                                                  $    3,110       $    4,242
   Services                                                                2,172            2,418
                                                                      ----------       ----------
      Total revenues                                                       5,282            6,660
                                                                      ----------       ----------

Cost of revenues:
   Software licenses                                                         229              226
   Services                                                                1,143            1,053
                                                                      ----------       ----------
      Total cost of revenues                                               1,372            1,279
                                                                      ----------       ----------

Gross margin                                                               3,910            5,381
                                                                      ----------       ----------

Operating expenses:
   Product development                                                     1,564            1,449
   Selling, general and administrative                                     4,006            3,653
                                                                      ----------       ----------
      Total operating expenses                                             5,570            5,102
                                                                      ----------       ----------

      Income (loss) from operations                                       (1,660)             279
Other income, net                                                            450               23
                                                                      ----------       ----------
      Income (loss) before income taxes                                   (1,210)             302
Provision for income taxes                                                   101               44
                                                                      ----------       ----------
      Net income (loss)                                               $   (1,311)      $      258
                                                                      ===========      ==========


Net income (loss) per share
   Basic                                                              $   (0.07)       $     0.02
                                                                      ==========       ==========
   Diluted                                                            $   (0.07)       $     0.02
                                                                      ==========       ==========

Shares used in computing net income (loss) per share:
   Basic                                                                  17,501           16,776
                                                                      ==========       ==========
   Diluted                                                                17,501           17,048
                                                                      ==========       ==========
</TABLE>



     See accompanying notes to condensed consolidated financial statements.


                                       4


<PAGE>

<TABLE>
<CAPTION>

                                UNIFY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

                                                                          THREE MONTHS ENDED JULY 31,
                                                                               1999              1998
                                                                          ----------        ---------
                                                                          (AS RESTATED
                                                                          - SEE NOTE 1)
<S>                                                                      <C>               <C>
Cash flows from operating activities:
   Net income (loss)                                                      $   (1,311)       $     258
   Reconciliation of net income (loss) to net cash provided by
   (used in) operating activities:
      Depreciation                                                               266              276
      Adjustments to minority interest                                          (265)             (36)
      Changes in operating assets and liabilities:
        Accounts receivable                                                    2,599              623
        Prepaid expenses and other current assets                                 68              (60)
        Accounts payable                                                         (83)              69
        Notes payable to minority interest stockholders                         (105)            (182)
        Accrued compensation and related expenses                               (304)            (411)
        Other accrued liabilities                                               (545)            (180)
        Deferred revenue                                                         735             (594)
                                                                          -----------        ---------
            Net cash provided by (used in) operating activities                1,055             (237)
                                                                          -----------        ---------

Cash flows from investing activities:
   Purchases of available-for-sale securities                                 (3,663)          (1,250)
   Sales of available-for-sale securities                                      6,072            1,561
   Purchases of property and equipment                                          (140)            (212)
   Other assets                                                                   36               20
                                                                          -----------        ---------
            Net cash provided by investing activities                          2,305              119
                                                                          -----------        ---------

Cash flows from financing activities:
   Principal payments under debt obligations                                      --              (19)
   Proceeds from issuance of common stock, net                                   316              157
   Collection of note receivable from stockholder,
     net of interest accrual                                                      24               (3)
                                                                          ----------        ----------
         Net cash provided by financing activities                               340              135
                                                                          ----------        ----------

Effect of exchange rate changes on cash                                          (22)               1
                                                                          ----------        ---------
Net increase in cash and cash equivalents                                      3,678               18
Cash and cash equivalents, beginning of period                                 5,315            5,279
                                                                          ----------        ---------
Cash and cash equivalents, end of period                                  $    8,993        $   5,297
                                                                          ==========        =========


Supplemental cash flow information:

Cash paid during the period for:
   Interest                                                               $       38        $      26
                                                                          ==========        =========
   Income taxes                                                           $      123        $      32
                                                                          ==========        =========
</TABLE>


                                       5



     See accompanying notes to condensed consolidated financial statements.


<PAGE>


                                UNIFY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.    BASIS OF PRESENTATION AND RESTATEMENT OF FINANCIAL STATEMENTS

INVESTIGATION AND RESTATEMENT

In June 2000, certain matters came to the attention of the Company's Board of
Directors that indicated that the Company had engaged in improper accounting
practices. The Company's Board of Directors authorized its Audit Committee to
conduct an investigation of the Company's accounting and financial reporting
practices and to recommend remedial action, if any, as a result of the findings
of their investigation. In July 2000, in connection with the ongoing
investigation, the Company placed its chief executive officer and its chief
financial officer on administrative leave, and in November 2000, the Company
terminated its chief executive officer and its chief financial officer resigned.
Based on the results of the Audit Committee's investigation, the Company
concluded that revenue, and in some cases expenses, had been improperly
accounted for in certain transactions during the fiscal year ended April 30,
2000, primarily related to the following:

-     Reciprocal agreement transactions for which there was insufficient support
      for the fair market valuation of inventory, funded development activities,
      or consulting services received by the Company, or equity investments made
      by the Company in connection with the Company delivering products or
      providing services.

-     Improper application of AICPA Statement of Position 97-2, Software Revenue
      Recognition ("SOP 97-2") in which all of the conditions for revenue
      recognition required by SOP 97-2 had not been met.

-     Contingent revenue transactions in which sales of software, services and
      other related items were contingent upon future events, including
      contingencies that were contained in side agreements.

-     Service revenue which was recognized during the first month of the
      contract, rather than ratably over the term of the contract in accordance
      with SOP 97-2

-     Other adjustments, including insufficiently supported journal entries and
      improper recording of marketing co-operative agreements.

The investigation also identified commissions, bonuses and other payments made
to the Company's former chief executive officer during the fiscal year ended
April 30, 2000, which the Company believes were not appropriate. Such amounts
have been charged to expense in that fiscal year; however, the Company is
seeking to have the amounts repaid by the former chief executive officer. The
investigation also included a review of transactions in earlier fiscal years.
After evaluating information from the results of the investigation, the Company
concluded that its financial statements for the fiscal year ended April 30, 1999
and earlier years were not materially misstated. Also, the Company concluded
that the effect on the financial statements for fiscal year 2000 of adjustments
relating to transactions of earlier years not being made in those years is not
material.

As a result of the investigation, the Company has restated its condensed
consolidated financial statements as of and for the three months ended July 31,
1999 from amounts previously reported


                                       6


<PAGE>


                                UNIFY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

to appropriately account for the transactions referred to above. The following
summarizes the significant effects of the restatement on the condensed
consolidated financial statements as of and for the three months ended July 31,
2000 (in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                                                         Three Months Ended
                                                                            July 31, 1999
                                                                            -------------
                                                                          As                    As
                                                                       Reported              Restated
                                                                       --------              ---------
<S>                                                              <C>                     <C>
     Total Revenue                                                $      8,708            $       5,282
     Gross Margin                                                 $      7,336            $       3,910
     Net Income (Loss)                                            $      1,746            $      (1,311)
     Basic Earnings (Loss) per share                              $       0.10            $       (0.07)
    Earnings (loss) per share                                     $       0.09            $       (0.07)

                                                                           Three Months Ended
                                                                            July 31, 1999
                                                                            -------------
                                                                          As                    As
                                                                       Reported              Restated
                                                                       --------              --------
    Total Current Assets                                          $     21,955            $      19,903
      Total Current Liabilities                                   $      7,917            $       9,074
     Total Stockholders' Equity                                   $     15,383            $      12,325
    Total Assets                                                  $     23,613            $      21,399
</TABLE>

BASIS OF PRESENTATION

The condensed consolidated financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). While the interim financial information contained in this
filing is unaudited, such financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which the Company considers
necessary for a fair presentation. The results for interim periods are not
necessarily indicative of the results to be expected for the entire fiscal year.
These financial statements should be read in conjunction with the Consolidated
Financial Statements and Notes thereto, which are included in the Company's
Annual Report on Form 10-K for the fiscal years ended April 30, 2000 and 1999 as
filed with the SEC.

2.    NOTES DUE TO MINORITY INTEREST STOCKHOLDERS

In September 1995, Unify Japan entered into a 100 million yen loan agreement
with a bank affiliated with Sumitomo Metals Industries, Ltd. ("SMI"). The loan
bears interest at the Tokyo International Bank Offered Rate ("TIBOR") plus 50
basis points (approximately 1% at October 31, 1999), and is secured by the
assets of Unify Japan.

3.    EARNINGS PER SHARE

SFAS No. 128, EARNINGS PER SHARE, requires a dual presentation of basic and
diluted income (loss) per share ("EPS"). Basic EPS excludes dilution and is
computed by dividing net income attributable to common stockholders by the
weighted average of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other


                                       7


<PAGE>


                                UNIFY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

contracts to issue common stock (e.g. convertible preferred stock, warrants, and
common stock options) were exercised or converted into common stock. The effect
of dilutive securities (stock options) is excluded in the diluted EPS
computation for the three months ended July, 31,1999 as their effect would be
antidilutive. The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations for the
periods indicated (in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED JULY 31,
                                                                   ---------------------------
                                                                       1999             1998
                                                                   -----------       ---------
<S>                                                              <C>              <C>

         NET INCOME (LOSS)  (NUMERATOR):
         Net income (loss), basic and diluted                     $   (1,311)      $      258
                                                                  ===========      ==========

         SHARES  (DENOMINATOR):
         Weighted average shares of common stock
              outstanding, basic                                      17,501           16,776
         Effect of dilutive securities (stock options)                    --              272
                                                                 -----------       ----------
         Weighted average shares of common stock
              outstanding, diluted                                    17,501           17,048
                                                                 ============     ===========

         PER SHARE AMOUNT:
         Net income (loss) per share, basic                       $    (0.07)      $     0.02
         Effect of dilutive securities (stock options)                    --               --
                                                                 ------------     -----------
         Net income (loss) per share, diluted                     $    (0.07)      $     0.02
                                                                 ============     ===========

         ANTIDILUTIVE SHARES:                                          1,637              866
                                                                 ============     ===========
</TABLE>

4.    COMPREHENSIVE INCOME (LOSS)

The Company's total comprehensive income (loss) for the periods shown was as
follows:

<TABLE>
<CAPTION>

                                                                     THREE MONTHS ENDED JULY 31,
                                                                     ---------------------------
                                                                         1999            1998
                                                                      ----------      ----------
<S>                                                                  <C>              <C>
         Net income (loss)                                            $   (1,311)      $      258
         Foreign currency translation                                        (30)             (34)
                                                                      -----------      ----------
          Total comprehensive income (loss)                           $   (1,341)      $      224
                                                                      ===========      ==========
</TABLE>

                                       8



<PAGE>



                                UNIFY CORPORATION

ITEM  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS

THE DISCUSSION IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING
STATEMENTS THAT HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS ARE
BASED ON CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT THE SOFTWARE
INDUSTRY AND CERTAIN ASSUMPTIONS MADE BY THE COMPANY'S MANAGEMENT. WORDS SUCH AS
"ANTICIPATES", "EXPECTS", "INTENDS", "PLANS", "BELIEVES", "SEEKS", "ESTIMATES",
VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT
ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. SUCH RISKS
AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE SET FORTH HEREIN UNDER
"VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS"
AND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K UNDER "BUSINESS - RISK FACTORS."
UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY
ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE. HOWEVER, READERS SHOULD CAREFULLY REVIEW THE RISK FACTORS
SET FORTH IN OTHER REPORTS OR DOCUMENTS THE COMPANY FILES FROM TIME TO TIME WITH
THE SEC, PARTICULARLY THE COMPANY'S ANNUAL REPORTS ON FORM 10-K, QUARTERLY
REPORTS ON FORM 10-Q AND ANY CURRENT REPORTS ON FORM 8-K.

The following discussion should be read in conjunction with the unaudited
Condensed Consolidated Financial Statements and Notes thereto in Part I, Item 1
of this Quarterly Report on Form 10-Q and with the audited Consolidated
Financial Statements and Notes thereto, together with Management's Discussion
and Analysis of Financial Condition and Results of Operations, which are
included in the Company's Annual Report on Form 10-K for the fiscal years ended
April 30, 2000 and 1999 as filed with the SEC.

RESULTS OF OPERATIONS

Overview

Unify develops, markets and supports Internet software that extends business
applications to the Web. The Company provides features-rich products and
services for organizations growing their business on the Web, based on open,
Java technologies. Unify's products provide enterprise, scalable and affordable
software for building and managing online applications. The Company's flagship
product line, Unify eWave, includes a Web application server, enterprise
application server and commerce framework built on the the Java 2 Enterprise
Edition ("J2EE") platform technology. These products are designed to enable
developers to rapidly build production-ready, scalable Internet and e-commerce
applications that are easy to manage and run with minimal down-time.

In June 2000, certain matters came to the attention of the Company's Board of
Directors that indicated that the Company had engaged in improper accounting
practices. The Company's Board of Directors authorized its Audit Committee to
conduct an investigation of the Company's accounting and financial reporting
practices and to recommend remedial action, if any, as a result of the findings
of its investigation. In July 2000, in connection with the ongoing
investigation, the Company placed its chief executive officer and its chief
financial officer on administrative leave, and in November 2000, the Company
terminated its chief executive officer and its chief financial officer resigned.
Based on the results of the Audit Committee's investigation, the


                                       9


<PAGE>

                                UNIFY CORPORATION

Company concluded that revenue, and in some cases expenses, had been improperly
accounted for in certain transactions during the fiscal year ended April 30,
2000, primarily related to the following:

-     Reciprocal agreement transactions for which there was insufficient support
      for the fair market valuation of inventory, funded development activities,
      or consulting services received by the Company, or equity investments made
      by the Company in connection with the Company delivering products or
      providing services.

-     Improper application of AICPA Statement of Position 97-2, Software Revenue
      Recognition ("SOP 97-2") in which all of the conditions for revenue
      recognition required by SOP 97-2 had not been met.

-     Contingent revenue transactions in which sales of software, services and
      other related items were contingent upon future events, including
      contingencies that were contained in side agreements.

-     Service revenue which was recognized during the first month of the
      contract, rather than ratably over the term of the contract in accordance
      with SOP 97-2.

-     Other adjustments including insufficiently supported journal entries and
      improper recording of marketing co-operative agreements.

The investigation also identified commissions, bonuses and other payments
made to the Company's former chief executive officer during the fiscal year
ended April 30, 2000, which the Company believes were not appropriate. Such
amounts have been charged to expense in that fiscal year; however, the
Company is seeking to have the amounts repaid by the former chief executive
officer. The investigation also included a review of transactions in earlier
fiscal years. After evaluating information from the results of the
investigation, the Company concluded that its financial statements for the
fiscal year ended April 30, 1999 and earlier years were not materially
misstated. Also, the Company concluded that the effect on the financial
statements for fiscal year 2000 of adjustments relating to transactions of
earlier years not being made in those years, is not material.

As a result of the investigation, Unify has restated its condensed consolidated
financial statements as of and for the three months ended July 31, 1999 from
amounts previously reported to appropriately account for the transactions
referred to above. The significant effects of the restatement on the condensed
consolidated financial statements as of and for the three months ended July 31,
1999 are summarized in Note 1. The information in Management's Discussion and
Analysis of Financial Condition and Results of Operations as presented herein
has been revised for the effects of the restatement.

REVENUES

The Company's strategy is to aggressively market and enhance its e-commerce and
Internet products. The Company continues to support its extensive installed base
of client/server products, which the Company believes represents a significant
source of potential customers for its Internet products. The Company also
generates significant revenues from services, including customer maintenance,
consulting and training.


                                       10


<PAGE>


                                UNIFY CORPORATION

Total revenues for the quarter ended July 31, 1999 decreased 21% over the same
quarter of the prior year to $5.3 million. The decrease during the first three
months of fiscal 2000 was primarily due to the Company's shift in focus from its
client/server product line to the Unify eWave product line, which was not fully
implemented during the first quarter. The decrease in total revenues was largely
the result of license revenues which decreased by $1.1 million to $3.1 million
in the first quarter of fiscal 2000 which was 27% lower as compared with the
same quarter of the prior year. Service revenues decreased $0.2 million (10%)
during the first quarter of fiscal 2000 to $2.2 million as compared to service
revenues of $2.4 million in the first quarter of fiscal 1999.

International revenues include all software license and service revenues from
customers located outside the United States. International revenues from the
Company's direct sales organizations in Europe and Japan and from value added
resellers, distributors, and other partners in all international locations
accounted for 60% and 52% of total revenues in the quarters ended July 31, 1999
and 1998 respectively.

COST OF REVENUES

Total cost of revenues as a percentage of total revenues increased from 19% in
the first quarter of fiscal 1999 to 26% for the first quarter of fiscal 2000.
During the first quarter of fiscal 1998, the comparative ratio was 26%.

In absolute dollars, cost of software licenses increased by only 1% in the first
quarter of 2000 as compared to the same period of fiscal 1999. Software license
revenue had decreased by 27% as compared to the same period of 1999. This
mismatch in revenues and expenses is the result of differences between revenue
recognition, which is variable, and the recording of expenses, which for the
most part are fixed as period costs. Cost of services consists primarily of
employee, facilities and travel costs incurred in providing customer support
under software maintenance contracts and consulting and training services. Total
cost of services increased 9% over the same period in fiscal 1999 to $1.1
million. The cost of service has a high component of fixed costs, and therefore
does not fluctuate as readily with the changes in revenues.

PRODUCT DEVELOPMENT

Product development expenses increased 8% to $1.6 million, compared with an
expense of $1.4 million for the same quarter of the prior year. The increase in
product development expenses in fiscal years 2000 and 1999 are primarily the
result of the design and development of the Unify eWave family of products and
the resources required to maintain and support this product line. The Company
believes that a substantial investment in product development is critical to
maintaining technological leadership and therefore continues to devote resources
to product development.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative ("SG&A") expenses for the quarter ended
July 31, 1999 increased 10% to $4.0 million, or 76% of total revenues, as
compared to $3.7 million, or 55% of total revenues, for the same quarter of
the prior year. The major components of SG&A for the first three months of
fiscal 2000 were sales expenses of $1.9 million, marketing expenses of $0.7
million, general and administrative of $0.3 million and bad debt expenses of
$1.0 million. Sales expenses, salaries and commissions, decreased $0.4
million as the result of the shift in focus to the Unify eWave product line
which had not been fully implemented in the first quarter. This

                                       11


<PAGE>



                                UNIFY CORPORATION

expense decrease was partially offset by an increase in marketing expense of
$0.3 million as a result of this new promotion. General and administrative
expenses decreased $0.4 million for fiscal year 2000 primarily as the result
of reduced professional services spending and adjustments for allocated
costs. As a result of management's evaluation into the performance and
quality of its outstanding receivables bad debt expenses increased by $0.9
million during the three month ended July 31, 1999 as compared to the
comparable period for the prior fiscal year. The Company expects that total
SG&A expenses may fluctuate from quarter to quarter primarily because of
variability in marketing program spending and sales commission expense.

PROVISION FOR INCOME TAXES

The Company recorded tax provisions for the quarters ended July 31, 1999 and
1998 which related primarily to foreign income taxes and withholding taxes on
software license royalties paid to the Company by certain foreign licensees. For
the same periods, the Company recorded no significant federal or state income
tax provisions as the Company had substantial net operating loss carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

At July 31, 1999, the Company had cash, cash equivalents and short-term
investments of $12.7 million, compared to $11.4 million at April 30, 1999.
Working capital decreased to $10.8 million at July 31, 1999 from $11.9 million
at April 30, 1999.


The Company's operating activities generated cash of $1.1 million during the
three months ended July 31, 1999, as compared to a decrease of $0.2 million
for the same period in the prior year. The increase in cash provided by
operating activities for the first quarter of fiscal year 2000 was primarily
from decreases in accounts receivable and increases in deferred revenues,
partially offset by operating losses and other decreases in accrued
liabilities and compensation expenses. Accounts receivable decreased by $2.6
million of which $0.7 million was achieved through the sale of receivables
without recourse. Investing activities during the period generated cash of
$2.3 million, consisting principally of net sales of available-for-sale
securities. Cash provided by financing activities during the period was $0.3
million, which represented proceeds from the issuance of common stock under
the Company's stock option and stock purchase plans.

VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS

The Company's common stock price has been and is likely to continue to be
subject to significant volatility. A variety of factors could cause the price
of the Company's common stock to fluctuate, perhaps substantially, including:
announcements of developments related to the Company's business; fluctuations
in the Company's or its competitors' operating results and order levels;
general conditions in the computer industry or the worldwide economy;
announcements of technological innovations; new products or product
enhancements by the Company or its competitors; changes in financial
estimates by securities analysts; developments in patent, copyright or other
intellectual property rights; and developments in the Company's relationships
with its customers, distributors and suppliers; legal proceedings brought
against the Company or its officers; significant changes in the Company'
senior management team. In addition, in recent years the stock market in
general, and the market for shares of equity securities of many high
technology companies in particular, has experienced extreme price
fluctuations which have often

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                                UNIFY CORPORATION

been unrelated to the operating performance of those companies. Such
fluctuations may adversely affect the market price of the Company's common
stock.

The Company's quarterly operating results have varied significantly in the past,
and the Company expects that its operating results are likely to vary
significantly from time to time in the future. Such variations result from,
among other factors, the following: the size and timing of significant orders
and their fulfillment; demand for the Company's products; the number, timing and
significance of product enhancements and new product announcements by the
Company and its competitors; ability of the Company to attract and retain key
employees; seasonality; changes in pricing policies by the Company or its
competitors; realignments of the Company's organizational structure; changes in
the level of the Company's operating expenses; changes in the Company's sales
incentive plans; budgeting cycles of the Company's customers; customer order
deferrals in anticipation of enhancements or new products offered by the Company
or its competitors; product life cycles; product defects and other product
quality problems; currency fluctuations; and general domestic and international
economic and political conditions. Due to the foregoing factors, quarterly
revenues and operating results are difficult to forecast. Revenues are also
difficult to forecast because the market for Internet and e-commerce application
development software is rapidly evolving, and the Company's sales cycle, from
initial evaluation to purchase and the provision of maintenance services, is
lengthy and varies substantially from customer to customer. Because the Company
normally ships products within a short time after it receives an order, it
typically does not have any material backlog. As a result, to achieve its
quarterly revenue objectives, the Company is dependent upon obtaining orders in
any given quarter for shipment in that quarter. Furthermore, because many
customers place orders toward the end of a fiscal quarter, the Company generally
recognizes a substantial portion of its revenues at the end of a quarter. As the
Company's expense levels are based in significant part on the Company's
expectations as to future revenues and are therefore relatively fixed in the
short term, if revenue levels fall below expectations operating results are
likely to be disproportionately adversely affected. The Company also expects
that its operating results will be affected by seasonal trends, and that it may
experience relatively weaker demand in fiscal quarters ending July 31 and
October 31 as a result of reduced business activity in Europe during the summer
months.

DISCLOSURES ABOUT MARKET RATE RISK

INTEREST RATE RISK. The Company's exposure to market rate risk for changes in
interest rates relates primarily to its investment portfolio, which consists
of cash equivalents and short-term investments. Cash equivalents are highly
liquid investments with original maturities of three months or less and are
stated at cost. Cash equivalents are generally maintained in money market
accounts which have as their objective preservation of principal and which
hold investments with maturity dates of less than 90 days. The Company does
not believe its exposure to interest rate risk is material for these
balances, which totaled $9.0 million at July 31, 1999. The securities in the
Company's short-term investment portfolio are generally classified as
available-for-sale and, consequently, are recorded on the consolidated
balance sheet at fair value with unrealized gains or losses reported as a
separate component of stockholders' equity. Short-term investments totaled
$3.7 million at July 31, 1999 and there were no material realized or
unrealized gains or losses on short-term investments during the first quarter
of fiscal 2000. The Company does not use derivative financial instruments in
its short-term investment portfolio, places its investments with high quality
issuers and, by policy, limits the amount of credit exposure to any one
issuer. The Company is adverse to principal loss and attempts to ensure the
safety of its invested funds by limiting default. The Company's short-term
investments at July 31, 1999 consisted of $3.7 million in high quality
corporate bonds maturing within one year, which the Company does not

                                       13


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                               UNIFY CORPORATION

believe carry any material interest rate exposure. If market interest rates were
to change immediately and uniformly by ten percent from levels at July 31, 1999,
the fair value of the Company's cash equivalents and short-term investments
would change by an insignificant amount.

FOREIGN CURRENCY EXCHANGE RATE RISK. As a global concern, the Company faces
exposure to adverse movements in foreign currency exchange rates. These
exposures may change over time as business practices evolve and could have a
material adverse impact on the Company's business, operating results and
financial position. Historically, the Company's primary exposures have related
to local currency denominated sales and expenses in Europe, Japan and Australia.

Due to the substantial volatility of currency exchange rates, among other
factors, the Company cannot predict the effect of exchange rate fluctuations on
its future operating results. Although The Company takes into account changes in
exchange rates over time in its pricing strategy, it does so only on an annual
basis, resulting in substantial pricing exposure as a result of foreign exchange
volatility during the period between annual pricing reviews. The Company also
has currency exchange rate exposures on intercompany accounts receivable owed to
the Company as a result of local currency sales of software licenses by the
Company's international subsidiaries in the United Kingdom, France and Japan. At
July 31, 1999, the Company had $1.1 million, $0.3 million and $0.6 million in
such receivables denominated in British Pounds, French Francs and Japanese Yen,
respectively. The Company encourages prompt payment of these intercompany
balances in order to minimize its exposure to currency fluctuations, but it
engages in no hedging activities to reduce the risk of such fluctuations. A
hypothetical ten percent change in foreign currency rates would have an
insignificant impact on the Company's business, operating results and financial
position. The Company has not experienced material exchange losses on
intercompany balances in the past; however, due to the substantial volatility of
currency exchange rates, among other factors, it cannot predict the effect of
exchange rate fluctuations on its future business, operating results and
financial position.


                                       14


<PAGE>



                                UNIFY CORPORATION

PART  II.     OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

Kurt M. Garbe, Chief Operating Officer, Asera, Inc., joined the Company's Board
of Directors effective August 12, 1999.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

<S>     <C>  <C>              <C>
        (a)   Exhibits
              None


        (b)   Reports on Form 8-K
              The Company filed no reports on Form 8-K during the quarter ended
              July 31, 1999.
</TABLE>




                                       15


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                                UNIFY CORPORATION


                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.


Date:  January  30, 2001            Unify Corporation
                                    (REGISTRANT)



                                    By: /s/ DAVID H. ADAMS
                                       --------------------------------
                                            David H. Adams
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)





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